In the middle of January, the Estonian FSA, Finantsinspektsioon, presented LHV
Group with the outcome of Supervisory Review and Evaluation Process (SREP)
capital adequacy calculation. In comparison with earlier there are some changes
in composition of additional own funds and in required targets.
According to the decision of the FSA, an additional requirement for own funds in
the amount 1.73% applies to LHV Group (compared to 1.53% in the 2018 SREP), of
which at least 0.42% (0.39% in 2018) must be covered by Core Tier 1 own funds
and at least 0.56% (0.52% in 2018) by Tier 1 capital. In addition, an added
capital requirement of 0.2% on deposits taken in from foreign financial
institutions remained in place.
In a council meeting on 19 February, the Supervisory Board of LHV Group based on
the FSA decision and adding to it internal buffers decided to set total CAD
target ratio at 16.00% (previously 15.50%), Tier 1 ratio at 12.46% (previously
12.10%) and Core Tier 1 ratio to 10.63% (previously 10.40%).
Underneath is the target split into components:
Core Tier 1 Tier 1 Total CAD
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Base requirement 4.50% 6.00% 8.00%
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Pillar 2 capital requirement 0.42% 0.56% 1.73%
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Non-resident financial intermediaries' deposits
according to Financial plan 0.10% 0.10% 0.10%
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Total SREP requirement 5.02% 6.66% 9.83%
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Capital conservation buffer 2.50% 2.50% 2.50%
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Systemic importance buffer (O-SII) 1.00% 1.00% 1.00%
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Systemic risk buffer 1.00% 1.00% 1.00%
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Discretionary counter-cyclical buffer 0.00% 0.00% 0.00%
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Total combined buffer 4.50% 4.50% 4.50%
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Total minimal regulatory requirement 9.52% 11.16% 14.33%
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Additional internally decided buffers 1.11% 1.30% 1.67%
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Group's internal capitalization targets 10.63% 12.46% 16.00%
Priit Rum
Communication Manager
Phone: +372 502 0786
Email: priit.rum@lhv.ee (mailto:priit.rum@lhv.ee)
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